Commerce Drops PMS Finding but Says Steel Overcapacity Could Cause PMS Finding in Future
The Commerce Department dropped its finding that a particular market situation affected inputs to oil country tubular goods from South Korea in remand results submitted on Oct. 24 to the Court of International Trade. Submitting the remand redetermination after a U.S. Court of Appeals for the Federal Circuit ruling, Commerce did say that it still believes imports of low-priced Chinese steel could contribute to the existence of a PMS and that, based on the Federal Circuit's ruling, it could in the future defend a PMS finding solely on this ground. The result of the remand left the dumping margins unchanged (Nexteel Co. v. United States, CIT #18-00083).
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The case concerns the second administrative review of the antidumping duty order on OCTG from South Korea in which exporter SeAH Steel Corp. served as a mandatory respondent. In the review, Commerce found that a PMS existed that distorted the cost of production for the OCTG products. The agency based this conclusion on five factors: subsidies from the South Korean government to hot-rolled coil (HRC) producers, strategic alliances between HRC and OCTG producers, Korean imports of Chinese HRC, the government involvement in the Korean electricity market and steel industry restricting efforts by the Korean government.
CIT remanded Commerce's PMS position twice, finding it to not be based on substantial evidence. The U.S. took the issue to the Federal Circuit, where the appellate court upheld the trade court's ruling (see 2203110044). The Federal Circuit outright said three of the factors -- Korean HRC subsidies, alliances between Korean HRC suppliers and OCTG producers and steel industry restructuring by the Korean government -- could not contribute to a PMS. Commerce looked at the remaining two factors on remand back at the trade court.
For the first -- the Korean government's involvement in the electricity market -- the agency found that there was not enough evidence to contribute to a PMS. In parallel countervailing duty investigations, Commerce has repeatedly looked into the Korean electricity market and deemed it not to be countervailable. The Federal Circuit ruled that Commerce had not justified its departure from this analysis. With this in mind, the agency said that while it believes there to be enough evidence to establish that government policy controls electricity prices in South Korea, there is "insufficient evidence" to reveal that Korean electricity prices were distorted during the review period.
Next turning to the impact of low-priced imports of Chinese steel, Commerce said that while it ultimately is not finding a PMS, evidence from the AD petitioners shows that these imports could contribute to the existence of a PMS. The Federal Circuit said that while this prospect is feasible, Commerce needs to show that these imports created a PMS with "sufficient particularity."
"Recognizing that there is no statutory or regulatory definition of 'particularity' or any statutory or regulatory test or standards in place for determining if a market situation is particular or not particular, we respectfully disagree with the CAFC that there is not sufficient evidence on the record to show that this market situation, overcapacity of HRC exported to Korea, is adequately particular to establish a PMS," the brief said. Using its own interpretation of the term "particular," Commerce said it believes the record to show that the impact of the imports is "more acute in Korea than in other countries, and that the distortions have resulted in lower price levels than what would have prevailed absent the distortions."
The Federal Circuit said a PMS could be found on this factor alone, but in this case, Commerce was content to drop its finding and rest assured knowing it could potentially use this justification for a future case. The agency further explained its use of the Cohen's d statistical test as part of its differential pricing analysis to detect masked dumping. Commerce recycled its argument, currently under scrutiny in other AD cases, that it did not need to abide by certain statistical assumptions made of the test since it is using the full population of the data and not a sample.